No exemption for co-op societies in Karnataka from Real Estate Act

The officials said the Union ministry for housing and urban poverty alleviation insisted all HBCS should adhere to the rules and regulations meant for developers and societies across the country.Sandeep Moudgal | TNN | October 06, 2016, 13:00 IST

BENGALURU: Many House Building Co-operative Societies (HBCS) are in a precarious position as the Centre denied relaxations sought by Karnataka on excluding them from the Real Estate Act, 2016.

The 1,643 HBCS, a lifeline for many home-owning aspirants in Bengaluru and across the state, have now been asked to construct layouts and apartments with only 10% of collecting the sital amount from each enrolled member. Sources in the co-operation department said on October 4, the Centre sent a clarification to an appeal by chief minister Siddaramaiah to exempt HBCS from the Act.

The officials said the Union ministry for housing and urban poverty alleviation insisted all HBCS should adhere to the rules and regulations meant for developers and societies across the country. The state had said that HBCS, unlike real estate developers with deep pockets, created housing for enrolled members and associate members after securing the full sital amount from them.

"How can the HBCS function with only 10% funding? Where will they get the rest of the amount to complete their projects? Based on this and other technical and legal concerns, the government had sought exemption for HBCS," said co-operation minister H S Mahadev Prasad.

However, on Tuesday evening, the clarification sent by the Centre said exemption could not be given. Sources said the Centre has given them a clear mandate that all sital formations and construction of apartments will be under the ambit of the act.

"With regard to issues about seniority, allotment of sites or apartments, disputes between societies and society members etc, the communication says all these issues will be under state laws," said a department official.

While this may be a huge blow to societies who will have to abide by timebound delivery of housing and park 70% of their collected sum towards the project in a dedicated bank account, apart from only 10% collection of site value, members and associate members waiting for decades to own sites will have protection on their investments.

The act will be enforced for all HBCS projects under way, who have been asked to upload their project status on the Centre's website, and new projects will have to be take permission from a committee which will be formed soon. The committee will be headed by an additional chief secretary rank official along with the law secretary and housing department secretary.